What will Rs 500 amounts to in 10 years after its deposit in a bank
Question:

What will Rs 500 amounts to in 10 years after its deposit in a bank which pays annual interest rate of $10 \%$ compounded annually?

Solution:

The amount deposited in the bank is Rs 500.

At the end of first year, amount $=\operatorname{Rs} 500\left(1+\frac{1}{10}\right)=\operatorname{Rs} 500$

At the end of $2^{\text {nd }}$ year, amount = Rs $500(1.1)(1.1)$

At the end of $3^{\text {rd }}$ year, amount $=$ Rs 500 (1.1) (1.1) (1.1) and so on

$\therefore$ Amount at the end of 10 years $=\operatorname{Rs} 500(1.1)(1.1) \ldots(10$ times $)$

$=\operatorname{Rs} 500(1.1)^{10}$